Rand forecasts few premium increases under PPACA

Yet another citadel of knowledge has weighed in on whether the Patient Protection and Affordable Care Act will lead to higher health insurance premiums.

The Rand Corp. says rates generally will not be higher as a result of the act’s implementation, as now configured.

Moreover, Rand found that workers at firms employing fewer than 100 workers are expected pay almost 6 percent less in premiums in 2016 than without the health care reform law.

Nationally, the report said, average premiums for equal plans would cost $5,837 with Obamacare in effect and $6,192 without it — a $355 savings. Premiums at large companies weren't examined in the report.

While Rand has a reputation as an objective source of information, it should be noted that the study was paid for by a unit of the Center for Medicare and Medicaid Services and the office of the Assistant Secretary for Planning and Evaluation in the U.S. Department of Health and Human Services.

In a release, Rand said: “The federal Affordable Care Act will lead to an increase in health insurance coverage and higher enrollment among people who purchase individual policies.” But its lead author, Christine Eibner, a senior economist at Rand, said, “Our analysis found no widespread trend toward sharply higher prices in the individual market.”

The study used a “microsimulation model” to crunch insurance data and to forecast a variety of insurance-related trends based upon research derived from 10 states: Florida, Kansas, Pennsylvania, South Carolina, Texas, Minnesota, North Dakota, Ohio, Louisiana and New Mexico.

“In 2016, there will be no premium changes in the United States overall and in five states (Florida, Kansas, Pennsylvania, South Carolina and Texas),” Rand predicted. “Three states (Minnesota, North Dakota and Ohio) could face premium increases of up to 43 percent, although those costs may be covered by federal tax credits. Louisiana and New Mexico may face premium declines.”

Rand said because large numbers of residents in states like Minnesota, North Dakota and Ohio already have coverage, there will be fewer people turning to the state exchanges for coverage. That will tend to drive premium costs up in such states.

In states expecting a rush to the exchanges, rates will remain the same or drop.

Other predictions from Rand’s crystal-ball gazing include:

By 2016, state residents who still have no coverage will range from “a low of 5 percent in Minnesota to a high of 12 percent in Texas. States with larger immigrant populations, such as Texas and Florida, will tend to have more uninsured people.”

More people in the small-group coverage market will be covered. “There will be increases in small group coverage of up to 5 percentage points in the United States overall,” Rand estimated.

Small-group premiums largely will be unchanged under the PPACA.

Twice as many people will buy individual policies through the exchanges by 2016. Rand said “enrollment in the individual market will rise from 4.3 percent of the nonelderly to 9.5 percent of the nonelderly” by then.